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Corporate reputation and the timeliness of external audit and earnings announcement

Corporate reputation and the timeliness of external audit and earnings announcement We examine the association between corporate reputation and the timeliness of external audit and earnings announcement. Changes in financial reporting regulation have resulted in longer audit delay, leading to an increase in the number of firms that announce earnings prior to audit completion, both of which have implications for the quality and usefulness of financial information. We find that corporate reputation is negatively associated with audit report lag, earnings announcement lag, and the likelihood of firms announcing earnings after audit completion. Our results are robust to a variety of sensitivity tests. We document important benefits in the form of timelier audits and earnings announcements derived from developing and maintaining a good corporate reputation. Our findings have implications for client firms and auditors, particularly given the challenges faced by auditors in terms of more onerous audit requirements and shorter filing deadlines, as well as demands for timelier information faced by firms. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Auditing Wiley

Corporate reputation and the timeliness of external audit and earnings announcement

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References (142)

Publisher
Wiley
Copyright
© 2020 John Wiley & Sons Ltd
ISSN
1090-6738
eISSN
1099-1123
DOI
10.1111/ijau.12202
Publisher site
See Article on Publisher Site

Abstract

We examine the association between corporate reputation and the timeliness of external audit and earnings announcement. Changes in financial reporting regulation have resulted in longer audit delay, leading to an increase in the number of firms that announce earnings prior to audit completion, both of which have implications for the quality and usefulness of financial information. We find that corporate reputation is negatively associated with audit report lag, earnings announcement lag, and the likelihood of firms announcing earnings after audit completion. Our results are robust to a variety of sensitivity tests. We document important benefits in the form of timelier audits and earnings announcements derived from developing and maintaining a good corporate reputation. Our findings have implications for client firms and auditors, particularly given the challenges faced by auditors in terms of more onerous audit requirements and shorter filing deadlines, as well as demands for timelier information faced by firms.

Journal

International Journal of Auditing – Wiley

Published: Nov 1, 2020

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